Under the leadership of the bull market, the price of Ethereum has risen rapidly, and the usage of its network has also continued to increase. In addition to the expansion of the cryptocurrency market’s own body mass, the main factor leading this market trend is the increasingly perfect DeFi ecosystem.
However, this positive phenomenon has exposed the stubborn problems in the Ethereum ecosystem: inefficient and slow TPS and high transaction fees required for transfers. Although there are constant calls for Ethereum to upgrade to 2.0, the challenge will be huge in the face of huge original ecological data.
Off-chain solution Layer 2
The biggest problem of Ethereum at the moment is the transaction performance problem, because it uses full-node accounting, which causes the system to be slow in executing transactions and often congestion. The essence of ETH2.0 is to adopt a sharding scheme, that is, the Ethereum network is divided into several shards, and nodes are also divided into different shards to participate in accounting and consensus. After the sharding, Ethereum has become a number of relatively smaller blockchains, and the number of nodes on each shard is significantly reduced, so it has higher work efficiency. But as we mentioned earlier, sharding on existing huge data and nodes is undoubtedly difficult.
What is Layer 2?
Layer 2 is to develop a blockchain in addition to the Ethereum main chain, which can move transactions on Ethereum to Layer 2 for processing, and then return the processing results or summary information to the Ethereum blockchain. Generally, if users want to use the DeFi protocol migrated to Layer 2, they need to transfer the assets to Layer 2, and the user transfers the assets to Layer 1 after the transaction is verified. The processing and computing power of Layer 2 comes from off-chain computing resources. In theory, it can achieve unlimited expansion by continuously increasing off-chain computing resources. Similarly, based on this, there is no GAS fee for user verification and transactions.
Now we no longer see Layer 2 as a very nice additional feature, but to transform it into the best infrastructure that enables Dapps to run sustainably in terms of performance and cost.
Looking at the market, we can see that Layer 2 is being recognized and followed by more and more users, and there are already several very bright Layer 2 platforms and protocols, such as Optimistic rollup as one of Layer 2 solutions. Many projects are built on top of them, but how do we choose a Layer 2 solution based on what best meets our needs? This article makes an objective comparison of three promising Layer 2 solutions.
Optimistic rollup is a Layer 2 solution based on rollup. Rollup is a solution that bundles (or “aggregates”) sidechain or off-chain transactions into a single transaction, and then submits the transaction to L1. In order to protect all these bundled transactions and make them individually verifiable, a cryptographic proof will be generated from the bundle.
The requirement for rollup work is to have an independent blockchain compatible with Ethereum, with additional functions that reduce the number of nodes or high performance, and is responsible for processing signature verification, contract execution, etc. This enables independent blockchains to verify the legality of subsequent bundling transactions in the Ethereum main chain. The L2 Rollup side chain is responsible for verification and contract execution, while L1 specializes in storing immutable transaction data.
How to determine that side chain transactions are effective in optimistic rollup? Optimistic rollup uses fraud to ensure that all transactions are legal. If someone notices a fraudulent transaction by the aggregator, they can challenge the rollup by sending a fraud proof proof to run the calculation of the transaction and verify its validity. The optimistic rollup means that instead of verifying each transaction as in other rollup solutions (such as zk-rollup), the proof calculation is performed only when fraudulent transactions are suspected.
Optimistic’s economic model is that the batch sequencer of each epoch needs a smart contract called a bond manager to mark as collateral. In order to become a mortgage sequencer, a fixed amount of ETH needs to be added to the contract. This economic model can prevent the sorter from becoming abnormal, but it does not solve the potential situation where the verifier is trying to send a large number of different batches of fraud proofs to the blockchain (forcing a large number of L1 calculations).
Celer Network is a project focusing on Layer 2 technology. Celer believes that Rollup and the Ethereum main chain are always separate. Even if it is compatible with EVM, it is difficult to achieve the main chain’s security and operational convenience in the short term, and there is an upper limit on the performance that can be improved. The difference between retail investors and institutions causes the former to pay more attention to Gas costs, while the latter pays more attention to safety, so it is more safe to choose Layer1. The conflict of interests between the two groups in the market will split the liquidity of Rollup and the main chain, greatly reducing the market efficiency of DeFi.
The Layer2.finance led by Celer Network will not migrate the DeFi protocol itself to Layer2 in the design concept, but builds a model similar to a decentralized intermediary. Users deposit funds on the Layer2 chain and use special Layer2 transactions (transactions). ) Form, indicating which DeFi agreement your funds wish to be placed in. In short, on the Rollup chain of Layer2.finance, the transaction will become a fund allocation instruction.
In the Celer network, even if its side chain channel can significantly reduce the required collateral deposit, it must still be proportional to the number of channels and the relay capacity of a single channel (such as payment). This requires a large amount of liquidity in the Celer network to ensure the normal operation of the state channel. In addition, the general state channel must require both users to stay online at all times, otherwise fairness and safety cannot be guaranteed. This lack of availability greatly limits the application of the state channel.
Agalta is a decentralized cross-chain protocol featured by its high-speed, security, and reliability. It is one of the first expansion protocols that support Ethereum , and can efficiently solve the congestion and high gas fees problems of Ethereum .Through side chain expansion technology, Agalata extends the internet to existing and future blockchain, Agalta helps developers to build Dapp quickly, and carry out large-scale commercial applications.
Agalta Protocol is committed to the construction of the public chain Layer-2 cross-chain DeFi ecosystem, will launch multi-chain cross-chain research and development plan as scheduled, and gradually open Layer-2 high-speed cross-chain network of Binance Smart Chain, Huobi Eco-Chain, Polkadot Main Chain, OKT and other public chains. As well as the enterprise development toolkit. One click fork of Defi projects and products on Ethereum will also be available here. And Agalata will become a cornerstone of the global public chain Defi eco-system.
The original cross-chain architecture adopted by Agalta Protocol makes Agalta more in line with the commercial needs of Layer 2. The Agalta Protocol cross-chain architecture consists of Aga-adapter, Aga-Hub cross-chain gateway, ACCP cross-chain communication protocol and Layer-2 Agalta chain relay. Chain network composition.
• Aga-adapter: the application chain adapter. It listens to the ETH Layer-1 main chain event information, and transmits the information to the Aga-Hub gateway through the ACCP cross-chain communication protocol.
• Aga-Hub: the cross-chain gateway. It provides communication routing and other functions for Layer-1 and Agalta relay chains according to the ACCP communication standard.
• ACCP: Agalta Cross-chain protocol. The cross-chain communication interaction under the Agalta Protocol all adopts the ACCP standard.
• Agalta chain: Agalta relay cross-chain network. It carries all transactions andclearing settlement as a Layer-2 network. It features ultra-high TPS (theoretical140,000+), 0 Gas feez and low latency.
Layer 2 solutions comparision
Now let’s compare all the representative projects in the market in a table
As shown in the table, Agalta Protocol stands out among many projects with excellent overall performance. It is very suitable as the best L2 solution that supports high-performance applications under the main net Ethereum L1.
We have enough reason to believe that the landing of Layer 2 and Ethereum 2.0 will have the chance to become an important fuel for the second expansion of Ethereum market. And this will eventually make Ethereum to a financial giant with over one trillion US dollars. In the future, Agalta Protocol will play a major role in L2 ecosystem construction, and develop to an important infrastructure of the global blockchain, let’s witness the history together.